Debbie Mitchell, PFS member and CII group board member, writes exclusively for Financial Planning Today on why she believes the CII group board decision to intervene at the Personal Finance Society, and effectively take control of the PFS board, is the right one. 

If you’re surprised to learn that a PFS member sits on the CII Board, then hold on to your hat – there are three of us! Three PFS members, each of whom has been deeply concerned about the governance failings of the PFS board over recent months.

I’ve been reading the views of other PFS members since the announcement and I’m disappointed that some of my fellow professionals are turning to conspiracy theories and myths rather than considering the facts. Simply put, the CII Group Board has called out poor behaviour and governance on the PFS Board.

The list of failings is sadly long: 

• a failure to act in line with the Articles of Association approved by PFS members;
• a lack of collective decision making by the PFS board;
• the exclusion of Institute-appointed directors from PFS board meetings and decision-making processes;
• the inappropriate establishment of at least one sub-committee, which is directing work without proper authority from the PFS board or input from the CII as required under the PFS board’s Terms of Reference.
• a group of PFS board members pursuing actions without full board authority that have led to significant expenditure on external advisors that is substantially above agreed limits;
• the PFS board seeking to exclude the CII Group Audit and Risk Committee from oversight of audit and financial statements;
• the PFS board reappointing expired board members by co-option rather than rotating the membership of the board.

Faced with the evidence, which I have scrutinised, it would have been a dereliction of my duty not to act with my fellow CII board members.

These are the sorts of failures that I am convinced the three Institute Directors joining the PFS board will help address.

And they are not there to run rough-shod over the existing members, who have always shown great passion and commitment to their profession. Suggestions of that nature are a slight on their character, professionalism, expertise and experience.

Yes, they are Institute appointed, but – just like me – they are of their own mind and I am sure will rapidly address the CII board’s concerns, and I hope now yours.

I’ve also seen a lot of myths being peddled in recent days. Like, the CII board is doing this to deregister the PFS. It is not. Or that the PFS can exist without the CII Group. It can’t. Or that this is just a cash-grab. Nope. PFS assets will continue to be used to serve PFS members, as has always been the case.

So, I’m appealing to my fellow PFS members to take a moment over Christmas. A moment of reflection brought by happier times, with friends and family, to consider the necessity for the right sort of change.

I strongly believe the CII Group of companies is a family too, and we can employ our high professional standards to work through this next period to a 2023 that sees good PFS board governance restored and the PFS thrive once again.

Debbie Mitchell is a PFS member and CII group board member. She is the owner of IFA firm Atholl Scott Financial Services in Aberdeen.

Sarah Lord, Immediate Past President of the Personal Finance Society (Sept 2020 to Sept 2022), writes in a personal capacity about her concerns for the future of the Personal Finance Society which is currently embroiled in a major dispute with parent body the Chartered Insurance Institute. Ms Lord is no longer a PFS board member although she remains a co-opted adviser to the PFS board.

I was shocked and appalled by the decision of the Chartered Insurance Institute (CII) on 21 December to add directors to the PFS Board and ultimately seek majority control, however, sadly I was not surprised.

During my 2 years as President of the PFS I received both veiled and explicit threats from the CII on more than one occasion, that they would take steps to “flood” the PFS board, notably in a letter I received in July.

Sadly during my time as President I have witnessed, in my opinion, wholly unprofessional and unnecessary board behaviours from the CII and this latest move is just yet another example.

I and the PFS Member Directors, strongly refute the allegations made by the CII of “serious and significant governance failings.” During my 6 years on the PFS board I can categorically state that all Member Directors have always acted in line with the Articles of Association and have taken their fiduciary responsibilities very seriously.

We have always acted with the utmost integrity and practised good governance, dare I say it, much to the annoyance of the CII.

I would go so far to say that the professionalism and competence of the PFS Board has been a thorn in the side of the CII in recent years. Especially when we’ve been faced with proposals to de-register the PFS and requests for cash, we have diligently and appropriately requested essential information to inform our decision making; and upon receipt of very limited information the PFS Board has been unable to justify supporting the requests from the CII on the basis that we do not believe it to be in the best interests of the PFS and the PFS membership.

It is important that the PFS membership and the CII membership understand that since March 2021, when the PFS was asked by the CII CEO at the time to consider 1) acting as guarantor to a loan the CII was seeking and 2) de-register the PFS, I as President and my fellow Member Directors have worked tirelessly and relentlessly to protect the PFS, the PFS assets and importantly always acting in the best interests of the company and the membership.

Furthermore, it is important to understand, based on legal advice received, citing “governance failings”, is the only way in which the CII could justifiably add additional directors to the PFS Board. Therefore, in my opinion, in seeking to control the PFS they’ve had to claim there are governance failings. There are not governance failings within the PFS Board, this is quite simply, in my opinion, the CII seeking to control the PFS with one aim, to secure the future of the CII.

It is publicly well documented that the CII is in a precarious financial position, the PFS is integral to their future survival, the PFS membership is approximately 30% of the total CII membership contributing approximately 43% of CII group membership revenues. The CII have stated that this is not about the money, I am sorry but it is my strong personal opinion that this is about the money.

It is publicly known that the CII has burnt through the sale proceeds of Aldermanbury (the former CII HQ in the City of London), still have an outlay to Legal & General for the Defined Benefit Pension Scheme and a potentially hefty tax bill from the HMRC waiting in the wings, before you even consider declining membership and exam revenue. You don’t need to be a forensic accountant to work out from the latest set of accounts that the CII is running out of money.

I note that the CII has been very careful in the terminology used when defending the accusations from the PFS membership that it is about the money, specifically Debbie Mitchell (engaged by the CII to represent the PFS members) in her piece on Financial Planning Today stated: “PFS assets will be used to serve the PFS members” and Chris Shadforth has stated “…will not result in cash being moved from PFS to any other company within the Institute’s Group of companies in any way different from now”, careful language in my opinion.

If I was a betting person, which I am not, I would bet that fairly swiftly after forming the majority, the CII will seek to increase the recharge that the PFS pays the CII for the services it provides to the PFS, which in my opinion would be wholly inappropriate; the PFS already pays significantly more than “fair value” for the services it receives particularly given that in recent years the level of service has, again in my opinion, fallen woefully short of what the PFS membership deserves.

I would also hazard a guess that they may seek to justify a transfer of millions back to the CII for the transformation programme, which in my opinion, has so far been a complete failure, the IT infrastructure of the CII lets the PFS membership down.

Financial Planning and advice is a profession in it’s own right, I am sick and tired of hearing “united profession” and “family” from the CII, if we are a family, it is my view, we are at best a family with a dysfunctional parent.

I firmly believe that the PFS Board needs to continue to have majority representation from those that practice in our profession, from Member Directors. It is the only way that the PFS will be able to serve our wonderful profession and in turn the membership serve consumers who now, more than ever due to the cost of living crisis, need financial advice and Financial Planning.

Furthermore, I advocate for the PFS gaining greater autonomy within the CII, it needs its own infrastructure, it is being let down by the services provided by the CII and needs to be resourced from within the PFS if the PFS is going to continue on it’s journey of being the voice for the profession.

I can not and will not support the action taken by the CII Board, and I call upon the PFS membership to unite, speak out and call for the opportunity for open and public dialogue through an EGM.

Sarah Lord is Immediate Past President of the Personal Finance Society (Sept 2020 to Sept 2022) 

Keith Richards is chairman of the Financial Vulnerability Taskforce and former CEO of the Personal Finance Society. He is also a former chief membership officer of the Chartered Insurance Institute. The Personal Finance Society is currently embroiled in a major dispute with parent body the Chartered Insurance Institute about its running and future direction. Here Mr Richards writes exclusively for Financial Planning Today about potential solutions to a bitter dispute.

The Chartered Insurance Institute's (CII) decision to air criticisms of the Personal Finance Society (PFS) Board members in public has shocked and outraged many across retail Financial Services and has shone a spotlight on what many see as unacceptable behaviour while heightening suspicion of financial issues at the Institute. 

Even though there is often no smoke without fire and some of the governance failings listed against the PFS Board may have merit, including the exclusion of the CII in the appointment of an interim PFS CEO which would not have helped matters, it is still hard to reconcile or justify the CII’s actions, especially in light of counter claims. 

The CII’s Royal Charter has a primary objective to secure and justify the public's confidence and trust in its members and the wider market. All the more bizarre, therefore, that the CII Board sanctioned the public criticism of PFS members and in doing so has brought the profession into disrepute. 

The CII brand and reputation has, of course, been under challenge for the past couple of years following various operational and exam failings which have negatively-impacted thousands of students and members throughout that time, both in the UK and internationally. The CII additionally received motions at its last two AGMs calling for an independent review of its controversial decisions, poorly-executed change programme and weakened financial position from the General Insurance membership and Local Insurance Institutes.

I was however particularly saddened to learn very recently that Caroline Stuart, President of the PFS, has suffered ill-health as a result of the CII’s aggressive behaviours and was forced to resign her volunteer position to take time out to recuperate. At a time when the CII should be leading the way on equality and metal health wellbeing, Caroline is a woman who gave her time on a pro-bono basis for her profession and was the first Chartered Paraplanner to be appointed to the prestigious position of PFS President. She was a shining role model and supported the commitment and drive to attract women into our profession and roles of prominence. 

When the CII launched its change programme in November 2016, its prospects for the future were positive. It had a good reputation, strong balance sheet, owned its own heritage head office, had stable and reliable operations, a highly commended customer service centre in South Woodford and a flourishing relationship with the PFS. The future indeed looked bright. Today however, that picture is not so positive with a shattered reputation, weak balance sheet, acting as a sub-tenant renting 50 desks at the Walkie Talkie building in the City of London, challenged operations, no highly commended customer service centre anymore and an explosive relationship with the PFS and membership.

The PFS on the other other hand is a separate company, limited by guarantee and its success during the same period has been down to its independent board, dedicated executive leadership and volunteer regional network. The achievements and initiatives of the PFS are very well documented for anyone to research, especially from 2013 to mid 2021, after which time the narrative by the CII was changed claiming the PFS's success to be due to the CII Board.

While the Personal Finance Society membership of c40,000 may look like the smaller contingent of the CII Group's c125,000 membership, it should be noted that over 60% of CII Group revenue has come from the Personal Finance sector and for this reason alone, suggestions of a separation were never a tenable outcome for the CII and may have hindered mediation. 

Both bodies had complemented each other for over 18 years and there is no reason why that cannot continue, if there is a will to do so on both sides.

There is a way forward and these are some potential solutions:

The situation can be rescued if the CII is prepared to listen and respond to member feedback and work with the PFS Board to find a better route in resolving their respective differences and needs.

Solution 1: The first thing the CII could do is to suspend its aggressive takeover of the PFS to demonstrate it is listening, genuinely cares and wants to consult members in a meaningful way.

Solution 2: Appoint independent mediators (agreed by both sides) as well as a panel of members to observe proceedings between the two boards - openness and transparency is essential to restore confidence and trust. 

Solution 3: Recognise and respect that the PFS had been run independently of the CII Board as a dedicated Professional Membership Body but part of the CII Group - there was never a question by the PFS Board of this position ever changing, even following de-registration attempts by the CII in 2017, 2019, 2021 and should continue to form the basis of a joint solution going forward - as should allowing the PFS to remain independent and member-influenced.

Solution 4: Find a mutually-agreeable solution to transfer PFS financial assets to the CII’s immediate needs, or as and when the CII’s own cash reserves fall below its expenditure limit, to mutually protect both bodies long-term interests and indeed that of its respective memberships.

Solution 5: Neither party should use PR or media campaigns to score points - lessons must be learnt that the PFS Board appears to have had no option but to publicly respond to public criticism they feel is unfounded - joint communications going forward would be best.

Actions speak louder than words - be mindful that actions must be consistent with stated intent or objectives, members are intelligent professionals who expect to be treated accordingly.

The CII has a long and distinguished history and it would be a travesty to see this issue result in longer term detriment when there are options available. The majority of people who have been in touch hope that reconciliation and a mutually-agreeable solution can be found, which satisfies the views and needs of members to ensure the long term benefit for all.

Keith Richards is chairman of the Financial Vulnerability Taskforce but writes here in a personal capacity. E: This email address is being protected from spambots. You need JavaScript enabled to view it. W: www.fvtaskforce.com

Simon Hodges, director of policy at STEP (the Society of Trust and Estate Practitioners), questions whether the current rules surrounding Inheritance Tax (IHT) are fit for purpose.

Richard Mattison, director at SSAS specialist Whitehall Group, comments on the scrapping of the Lifetime Allowance, the raising the Annual Allowance and the unintended consequences they could cause.

Experienced compliance consultant Tony Catt looks at the consequences for advisers of the FCA's new Consumer Duty which begins on 31 July.

For most advisers, the Consumer Duty is simply the latest effort by our regulator to get advisers to treat clients fairly and not rip them off. How hard can that be?

One of the things that I feel is of key importance is that advisers need to look at their own products – their advice process. This is not simply the process that involves – know your client, set objectives, do research, present and then implement. More importantly, and in my opinion more interestingly, this involves looking at their ongoing service and client reviews.

This originates with the IDD and fee agreements. Do the clients understand how and when they are going to pay the adviser for their service? More importantly, do they understand what they are going to get from the adviser in the future for that payment?     

This comes into the realms of segmenting clients into service levels. Traditionally, this has largely been done using size of funds as the criterion. This should really be done by time of life. So, you may have:

• young people getting established.
• People protecting themselves.
• People planning towards retirement.
• People at retirement.
• People in retirement.
• People planning for inheritance.
• People planning for long term care.

This list is not exhaustive and bear in mind that planning for most of those elements may not happen in that order. Most likely it may happen together and need to be prioritised into short-term and long-term goals. 

Anybody who has attended the FCA Live & Local events (strongly recommended) will know that the FCA differentiates between price and value. Price is what you pay. Value is what you get.

So, the blanket application of 0.5% - 1% in charges may not prove to be appropriate for many people – neither clients nor the adviser firm.

Someone with £1m invested will pay £5,000 per year. Someone with £100,000 will pay £500 per year. There will always be an element of cross-subsidy. This is accepted by the FCA. 

If an adviser values their time at £200 per hour, then the £1m client pays for 25 hours and £100k client pays for 2.5 hours. It depends how much the adviser does for a client, but neither of these figures are likely to be right for either of those clients.

Advisers need to do the exercise of working out how much time they actually spend with their clients. While this may take some time, it may prove worthwhile if it gives a more accurate valuation of the adviser’s time and therefore the value of the adviser firm.

Treating clients fairly does not mean giving them all the same service or charging them the same amount of money. This exercise may well lead to increased charges for clients and the FCA will not be concerned, if it can be seen that clients are receiving fair value.  

Do the exercise, you may be pleasantly surprised that you can reasonably increase your charges. The FCA needs adviser firms to be profitable to remain operating. Remember to keep the evidence of your consideration of this issue.

Tony Catt is compliance consultant at The Catt’s Eye View. He works as a freelance compliance consultant in Financial Services. His clients are mainly adviser firms. He is a member of the Association of Professional Compliance Consultants.

https://www.thecattseyeview.co.uk/

07899 847338 / This email address is being protected from spambots. You need JavaScript enabled to view it.

Fintech entrepreneur Tessa Lee of Moneyinfo looks at why AI and the latest tech are valuable tools for Financial Planners but are no replacement for human interaction.

I wondered what ChatGPT would think about replacing a human Financial Planner so I asked it. Its response was that while it could offer insights and guidance, it cannot replace the expertise and personalised advice offered by a human.

When I said I was anxious about having enough money in retirement it suggested that I consult with a qualified Financial Planner who could provide valuable guidance, personalised advice and peace of mind.

If AI doesn’t think it can replace the human planner then why should we? 

Technology and humans possess fundamentally different abilities. Computers are good at automation. They are faster and more accurate than us.

They complete repetitive tasks without making mistakes or getting bored, but they are not emotional or empathetic.

Where computers act based on the inputs or data they receive, humans possess a very different type of intelligence. Often what people say is not what they actually feel. Humans sense emotion and vulnerability. They understand nuances of behaviour or cultural differences. They make judgements and adapt to changing circumstances. This is why computers, even the artificially intelligent ones, cannot replace a real-life Financial Planner.

Instead, technology’s role is to enhance what we do. In Financial Planning this means outsourcing tasks to technology to allow planners to focus on what clients really value; the conversations they have with their planner and the peace of mind that this brings.

Today’s clients, young or old, expects access to information and service in a digital way because this is what they get in all other aspects of their lives. In today’s world it is also critical that firms can communicate securely with their clients but in a way that is easy for them.

Every firm I speak to is looking to improve efficiency throughout their business and remove friction and cost from key processes like on-boarding and client reviews. It’s precisely these processes that technology can enhance, removing paperwork and driving greater efficiency. We call this digital relationship management and it’s changing the way Financial Planning firms do business for the better.

Imagine that a client gets a push notification through your app to update their digital fact find when their review is due, or to nudge them to review a financial plan report or accept your client agreement.

Through tailored workflow processes to perform key tasks, such as getting clients to book meetings or sending out documents, business processes can be speeded up. When tasks can be completed in minutes rather than days your business becomes more profitable.

Instead of replacing human interaction, technology frees up time for everyone to focus on more rewarding and valuable tasks. Planners can then spend more quality time talking to clients and nurturing new relationships.

Technology is far from becoming the next super-planner. In reality, it’s an ally not an enemy and it’s there to help you do business in a more efficient and profitable way. Clients will always value and want the human relationship in Financial Planning…just ask ChatGPT!

Tessa Lee is managing director of Moneyinfo, a fintech firm based in Henley in Arden, Warwickshire, specialising in client portals and mobile apps for the wealth management industry. Ms Lee has more than 20 years’ experience working in financial advice and fintech and holds several CII Financial Planning qualifications.

https://www.moneyinfo.com/

@moneyinfotech 

In this guest column, Paraplanners’ Assembly Big Day Out co-host Sarah Lees looks forward to this year’s conference for Paraplanners. This article first appeared in Financial Planning Today magazine (July-Aug issue).

There’s something about the Paraplanners’ Assembly’s Big Day Out (and, before that, the national Powwow) that I’ve always found irresistible.

It might help explain why, when Sam Tonks and I welcome the 2023 Assembly to our national gathering at 10am on 14 September, it will be the seventh time I’ve taken part in the national event in a 10-year Paraplanning career.

Looking back, it would be easy to think that the unconventional staging of a financial services event in teepees on a farm was the big draw.

Yes, the teepees were great, but the Big Day Out’s post-lockdown home, FarmED, is simply stunning. Set on a hillside in the heart of the Cotswolds, the RIBA award-winning venue has given the event a new vibe: an annual retreat where you can reset, revive and thrive.

I think what makes the Big Day Out - and the Assembly more generally - so distinctive is that it’s only for Paraplanners. To quote the blurb from the website: “You’ll feel you belong at an Assembly because the Assembly belongs to you.”

Paraplanners host the day. There are Paraplanners leading each group. We make sure the breaks are long enough for people to catch up or meet for the first time. It’s never been about numbers but quality of experience (participant numbers are set at 100.)

The food matters. So do the sweets. And the ticket price is affordable for all Paraplanners.

At the heart of it all is the Assembly’s original idea - informal gatherings where Paraplanners can exchange views, learn things, fix things and share things. That’s as true today as it was 10 years ago. 

To find out more about the Big Day visit: https://paraplannersassembly.co.uk/event/the-big-day-out-2023/

Sarah Lees FPFS, STEP Affiliate, works as a senior Paraplanner at Mazars. She is the CISI Paraplanner of the Year 2021 and co-host of the Big Day Out.

Paraplanner Assembly:

This email address is being protected from spambots. You need JavaScript enabled to view it.

https://paraplannersassembly.co.uk

Leading Paraplanner and former President of the PFS Caroline Stuart shares her tips on networking at events for those a little apprehensive of meeting new people. A full version of this article, which has been inspired by a LinkedIn post, will appear in the Sept-Oct edition of Financial Planning Today magazine. 

September is the beginning of financial services Conference Season, but for many, the thought of going to an event, particularly alone, can be at best daunting and at worst, bring them out in a cold, terrifying sweat.

I’ve never been a natural networker and always seemed to feel like a peanut in a packet of crisps at events. I’d be the one in the corner pretending to read a hand-out or ‘checking emails’.

That was until I went to my very first Paraplanners' Assembly in 2013, which was filled with people just like me. They were also super friendly and easy to talk to. Striking up conversation with new people was still way out of my comfort zone but I forced myself to do it and I’m so glad I did.

As a result of that very first Assembly, I now have a great group of friends, peers and colleagues and I’ve gone on to do things in my career I'd never have done if not for the confidence I’ve built, starting from that very first event. So if getting out to events feels like a real challenge, here are some of my top tips I’ve learned over the years that have helped me:

1. Get prepared – think about a few simple universal questions you could ask anyone – where are they from?, what has been their favourite session?, etc
2. Get Involved - If there’s an app or social media chatter about the event, try and connect with people beforehand so you have a familiar face when you get there
3.  Take a pal! – Things are always easier with some support, can you go with a colleague or peer?
4.  Get Introduced – If it’s more comfortable, you could ask colleagues to introduce you to people to get the ball rolling.
5.  Remember, you are not alone – Don’t forget, others may also be nervous – if there’s someone else on their own looking a bit unsure, why not buddy up with them

Failing all of those though, if you see me at an event, you can come and practice your networking skills on me – I’m always very happy to have a natter!  

Caroline Stuart APP Chartered MSCI Caroline Stuart is the founder of outsourced Paraplanning firm Sparrow Paraplanning in Melton Mowbray. She is a multi award winning Paraplanner providing Paraplanning, report writing and technical support to UK Financial Planners and advisers. She also runs Sparrow Solutions, providing training, workshops, CPD events and operational support to Financial Planning and Paraplanning businesses www.sparrowsols.co.uk

www.sparrowparaplanning.co.uk

Experienced Paraplanner Christina Georgiou explains why outsourced Paraplanning is not the cut-price budget option some see it as.

Being an in-house Paraplanner is such a privileged role – there’s a high demand for your skills and you can command a high salary and other benefits as a result.

I was an in-house Paraplanner for many years, even before Paraplanning was a word. I had some great roles, where I learned a tremendous amount and built up my experience. Even the not so good roles taught me a lot too.

I joined Argonaut Paraplanning, which provides outsourced Paraplanning, in July 2021. It’s been an adjustment and I had to question my preconceived biases about the quality of the work outsourced Paraplanners provide.

I found that Argonaut’s commitment to raising the standard of advice matched my own, and so, in two short years, I now find myself as co-director with Alan Gow.

What I have noticed is a perception that outsourced Paraplanning is much cheaper than in-house and this is a reason for outsourcing. However, there are significant differences.

Although Lockdown has made us all more flexible, it remains easier for in-house Paraplanners to attend client meetings and be integral to the advice process from the start.

They may also sit on Investment Committees and have compliance duties.

By contrast, many outsourced Paraplanners join the advice process part way through and there’s a wide variation in what they do. Some are report writers, some gather information, and some will do research, analysis, gap filling and help construct advice before writing the report.

I don’t believe that an advice firm should use an outsourced Paraplanner because it’s cheaper.

I believe in the right type of Paraplanner for each firm. If that’s an outsourcer, they can provide additional capacity, experience, a second pair of eyes and will complement a firm’s advice process, potentially saving time and some money too.

Christina Georgiou is a director of outsourced Paraplanning support firm Argonaut Paraplanning. She is a career Paraplanner with over 20 years’ experience.

https://argonautpp.com/